Our modern landscape has been ineluctably altered by the emergence and proliferation of digital technology – a self-evident observation, but one that illustrates the modern-day ubiquity of devices and assets we often take for granted. [1]

Innovation also remains ongoing, as new ideas permeate existing systems to give us new forms of commerce altogether. One of the leading examples of this is the ‘digital asset’ – but what is it, and how is it changing?

What is a Digital Asset?

A digital asset is, essentially, an item of data or content that exists in a purely digital form – that is, represented by digital information or code. Blockchain is the technology behind cryptocurrency [2], being a peer-to-peer network that allows the decentralised transacting and transfer of digital currencies like Ethereum and Bitcoin between individuals and wallets. That same technology has been used to allow the ‘minting’ of bespoke digital assets, allowing them to retain value in the same way as traditional works of art.

Managing Digital Assets

These digital assets, shored up by immutable distributed ledger technology (DLT) of blockchain, have a variety of potential functions and purposes including but not limited to art investment. Non-fungible tokens (NFTs) are unique links to digital assets, ownership of which can be tracked via the ledger. Meanwhile, smart contracts can be used by businesses to pass digital assets to one another [3] with peerless security and unerasable evidence of transaction.

There are unique challenges to the implementation of blockchain-based digital asset handling, from jurisdictional friction arising from differing laws between nations to the ensuring of security at either end of a given transaction. However, these challenges are a blip in what promises to be a bright future for financial technology, commerce and even the collection and curation of new art.